By Takashi Mochizuki and Kosaku Narioka 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 9, 2018).

TOKYO -- Toshiba Corp. officials have mostly given up on an $18 billion sale of the company's chip unit because Chinese antitrust approval is unlikely to come soon, leading them to accelerate a review of alternatives, people involved in the matter said.

The Japanese company reached a deal in September to sell its NAND flash-memory unit to a group led by private-equity firm Bain Capital, but the deal has been waiting for a nod from antitrust regulators in China, one of the unit's top markets. Flash memory is widely used in smartphones, computer servers and other devices.

Chinese authorities have been generally uncommunicative about the status of Toshiba's application in recent weeks, according to people involved in the effort. The brushoff comes amid heightened trade tensions between China and the U.S., home to Bain and others in the buyer consortium.

Chinese regulators gave an initial pessimistic review in April to another chip deal involving a U.S. buyer, Qualcomm Inc.'s $44 billion purchase of NXP Semiconductors NV.

People involved in the Toshiba transaction say that under Chinese guidelines regulators have until the end of this month to screen the company's submission and that last-minute approval isn't out of the question. Representatives of Toshiba and Bain said they were waiting for China's decision.

On Wednesday, after initial publication of this article, Toshiba issued a statement saying it "still intends to close the memory business transaction as soon as possible, and has not made any alternative policy decisions."

However, senior officials at the Japanese company are moving on to next steps. "The deal is going nowhere, and the current scheme is dead," said a person directly involved in Toshiba's effort.

As of April 1, Toshiba gained the right under its contract with Bain to cancel the deal.

China's Ministry of Commerce referred queries to the State Administration for Market Regulation, which didn't immediately respond to a request for comment. China is consolidating its three antitrust regulators, including a unit at the Ministry of Commerce that has been handling Toshiba's application, under the State Administration for Market Regulation.

The Bain group got support from Toshiba customers including Apple Inc. and Dell Technologies Inc., as well as South Korean chip maker SK Hynix Inc. Initially the parties hoped to close the deal by the end of March and saw Chinese approval as likely because it could result in a stronger competitor against semiconductor giant Samsung Electronics Co.

Sentiment changed in March as trade tensions heated up between Washington and Beijing. Also, Toshiba fortified its financial position late last year by raising more than $5 billion in new capital and now faces less pressure to sell the chip unit to raise cash quickly.

"We don't have any strong wishes that they should sell it," said Dai-ichi Life Holdings Inc. President Seiji Inagaki in an interview. His company is a lender to Toshiba and a shareholder.

Toshiba executives have been reviewing alternatives such as listing the chip unit on a stock exchange, changing the composition of the buyer group or keeping the chip unit as a full part of Toshiba, said people involved in the discussions. Some investors outside Japan have been urging the company to cancel the deal, saying Bain's price -- Yen2 trillion, or about $18 billion -- was too low.

None of the alternatives appears to have gained sway among decision makers, in part because they are still waiting for Chinese regulators to weigh in.

Although the chip unit contributes the vast majority of the parent's profit, Toshiba's new chief executive officer, Nobuaki Kurumatani, said in April that making the unit independent of Toshiba was the best option because the parent didn't have the financial backbone to support the business. Keeping the chip unit competitive requires billions of dollars in investment each year.

Xiao Xiao

contributed to this article.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com and Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

May 09, 2018 02:47 ET (06:47 GMT)